Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Do you want to buy a new home, but don't know how you should put together your down payment?

Reduce expenses and save. Turn your budget upside-down to discover extra money to save for your down payment. You might also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into a savings account. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your vacation.

Sell things you do not really need and get a part-time job. Maybe you can find an additional job and save your earnings. Additionally, you can make an exhaustive list of things you can sell. Unused gold jewelry can bring a good price from local jewelers. Maybe you have desirable items you can sell on an online auction, or household items for a tag or garage sale. You might also research what your investments may bring if sold.

Borrow your down payment from your retirement plan. Research the specifics of your particular plan. Some people get down payment money by withdrawing from IRAs or borrowing from their 401(k) programs. You will need to be sure you know about any penalties, the way this may affect on income taxes, and repayment obligation.

Ask for assistance from generous members of your family. Many buyers are sometimes fortunate enough to get help with their down payment assistance from gracious family members who are prepared to help them get into their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Research housing finance agencies. Special loan programs are extended to homebuyers in specific circumstances, like low income buyers or people planning to renovating homes in a particular place, among others. With the help of this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies can help you with a lower interest rate, get you your down payment, and offer other benefits. The central mission of not-for-profit housing finance agencies is build up the purchase of homes in certain areas.

Explore no-down and low-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get home financing. FHA aids first-time homebuyers and others who may not be eligible for a typical loan on their own, by providing mortgage insurance to lenders. Down payment totals for FHA loans are lower than those with traditional mortgages, even though these loans have average rates of interest. The down payment may be as low as 3 percent and the closing costs might be financed in the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Although the VA does not actually finance the mortgage loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. In contrast to the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you some of his home equity to help you with your down payment money. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you'll pay a slightly higher interest rate with the loan from the seller.

No matter how you gather down payment money, the thrill of reaching the goal of living in your own home will be just as great!

Need to talk about the best options for down payments? Call us at 407-834-3377.

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